Oracle and Cover Oregon: How Silicon Valley views its uneasy relationship to Obamacare

Editor's note: This piece first ran in this morning's Silicon Valley Business Journal.

When Healthcare.gov had what could only be termed as the product release from hell last year, the typical reaction in Silicon Valley was a kind of knowing smirk.

"Those government contractors don't know what they're doing," we thought. "They should have come to Silicon Valley. We fail fast. We do agile development. We know big projects. We'd sort that out in a hurry."

And our smugness seemed to be confirmed when the government dumped the original contractor, CGI Group, to go with Accenture, a Dublin firm with strong Silicon Valley ties. And things, for the most part, have gone well. The exchanges are working, mostly, and Obamacare has come back strong. Enrollment reached 7.1 million in April, just above the president’s first-year goal.

But last week, Oregon announced that it was dropping its own state exchange, a decision that is significant for a couple reasons.

The first is that the Oregon exchange was pointed to as one of the few successes for the Obamacare model in the early days of the rollout when everything still seemed to be collapsing.

The other is that the Oregon exchange had among the deepest Silicon Valley roots: The company with the $300 million contract to build and maintain it was Redwood City-based Oracle Corp. Although I’m sure many of its startup competitors would disagree with me, technology firms don't get more Silicon Valley than Oracle.

So what to make of that? Well, first it’s in some ways a ratification of HealthCare.gov, which has become so good that it’s a viable option to the state exchange. (Switching to the federal site will cost Oregon about $7 million, compared with nearly $80 million to fix the exchange).

But here’s the bigger takeaway for Silicon Valley and its customers: This stuff is hard. There’s a tendency in tech to overestimate the issues that good technology, like a best-in-class database, can fix. There’s also a tendency to underplay the difficulties caused by non-tech factors — like the fact that this one website was expected to change the business model of hundreds of insurers across the country that have been doing things the same way for hundreds of years, all at once.

As the saying goes, when all you have is a hammer, everything starts to look like a nail, and when it comes to technology, nobody has a bigger hammer than us.